Logitech Forecasts Sales of $1.36 Billion to $1.43 Billion as Supplier Disruption Hits Supply
Key Facts
Logitech forecast third-quarter fiscal 2027 sales of $1.36 billion to $1.43 billion, representing a year-over-year change ranging from a 4% decline to 1% growth on a dollar basis. The guidance follows a disruption at a semiconductor supplier’s facility, which closed after an incident in late June and reopened in mid-September without operating at full capacity. The company said its dollar-based guidance differs from its constant-currency measure, which ranges from a 5% decline to flat. The outlook points to a potential slowdown next quarter after a long run of sales growth, while the supplier’s shipments remain affected by the incident. The company said sales typically peak in its fiscal third quarter, which runs from October to December, as consumer demand rises during the holiday season.
Logitech reported net sales of $1.2 billion in the second quarter, up 3% in dollars and 2% in constant currency from a year earlier. The company said that marked its 11th consecutive quarter of year-over-year sales growth, despite what its chief executive described as a challenging environment. The chief executive attributed that environment to tight component supplies, higher costs and the ongoing conflict in the Middle East. The company estimated that its underlying sales would have grown about 4% in constant currency in the second quarter without the effects of the supplier incident and geopolitical conflicts. In its earnings presentation, it said: "Second-quarter net sales were $1.2 billion, up 3% in U.S. dollars and 2% in constant currency," adding that the company had delivered "the 11th consecutive quarter of year-over-year sales growth."
Performance varied across product lines and geographic regions in the second quarter. Video collaboration sales grew 12% in constant currency, gaming sales rose 7%, while global PC market shipments contracted about 20% year over year in the September quarter. In Europe, the Middle East and Africa, the company’s sales fell 6%, a decline Logitech attributed to market weakness and the ongoing conflict in the Middle East. The divergence in these figures shows that growth in some product lines coincided with pressure on the broader market and in the Europe, Middle East and Africa region. The company did not attribute the region’s performance to a single cause, linking it instead to market weakness and the continuing conflict.
Logitech’s initial estimate in July was that the supplier incident could have a negative impact of up to $200 million on third-quarter sales, based on the limited information available at the time. The company then expected most of the impact to be resolved by the fourth quarter, making the facility’s recovery trajectory an important factor in its outlook for coming quarters. The company said the facility reopened in mid-September but had not returned to full capacity. For the third quarter, Logitech expects non-GAAP operating income of $220 million to $255 million and a gross margin of 41% to 42%. It also said gross margin could decline about 200 basis points year over year, driven by higher logistics and materials costs and a modest increase in promotional spending.
For fiscal 2027, Logitech said it expects non-GAAP operating income margin to be at the high end of its long-term range of 15% to 18%, even after excluding a $61 million tariff refund from the previous quarter. The chief executive expressed an expectation of continued positive demand overall during the holiday season, with a modest increase in promotional spending compared with last year. The company had launched 19 new products for the holiday season quarter, according to the chief executive. In its second-quarter results, adjusted earnings per share were $1.51, exceeding the average analyst estimate of $1.30 by $0.21. But the earnings beat did not prevent Logitech shares from falling 5.7% in after-hours trading on Tuesday, October 27, after the company warned of supply disruptions and their effect on third-quarter sales.